5 ms·
His equity appreciated and will be taxed appropriately when it is sold.
by pb7 5y ago
His equity appreciated and will be taxed appropriately when it is sold.
- monocasa 5y agoExcept it doesn't get per se, loans are taken out and paid back on a schedule smaller than the appreciation of the stocks which were used as collateral. That's what that $1B was, and is relative scales we're talking about.
- missedthecue 5y agoHow do you pay back loans without income?
- monocasa 5y agoYour capital you used for collateral on the loans accrues value quicker than the loan's payments. Hence that 1% effective rate.
- missedthecue 5y agoBut eventually, you sell that capital to repay the loan, triggering a tax event.
- monocasa 5y agoExcept you had access to the capital the whole time via the loans, and only pay back according to the loan schedule, negating most of the tax burden. Hence the 1% figure based on the numbers you yourself provided.
- missedthecue 5y agoIn what way does that negate tax burden. You have to sell (some of) the assets to pay the loan you borrowed. That causes a tax to be paid.